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Monday, 14 June 2010

Many years ago I went to Chicago to try and persuade Sears they were wasting God knows how many million on untargeted newspaper inserts - offers I thought would do a lot better if carefully aimed via direct mail.

I had no luck because the man who handled the Sears account at their advertising agency - allegedly a partner of ours - stopped me even meeting the client.

There is an ocean of research showing that indiscriminate promotion doesn't pay as it degrades your brand, but a new report by research firm FastMap reveals a surprising twist.

A survey among over 1,400 shoppers commissioned by the Institute of Promotional Marketing suggests that discounts over 25% do little to get shoppers to try a new product, have no influence on subsequent loyalty, and "could be costing the industry nearly £200m a year".

Discounts work, of course - especially when times get tough. Nearly 90% of people said they had tried a different brand because of a money-off coupon and coupon redemption has shot up 70% in the last two years, with £813m redeemed in 2009.

The surprise is that a coupon with a lower discount value created greater loyalty than the reverse. Three in ten who had used a coupon worth 15p to 20p stayed with the new product afterwards but only 25% who redeemed a coupon for £1 or more kept buying it.Over half those surveyed said they would try a different brand when given a money-off coupon worth 5p to 50p if both the rival product and their usual brand cost £2. Just 27% said the discount would have to be at least £1. This is far less than the current average discount of 48%.

One major dairy brand managed to achieve a 26.8% cost saving by reducing its coupon face value by 25%, according to Valassis MD Charles D'Oyly. This was achieved at the cost of only a 0.66% reduction in redemptions compared with past campaigns.

Research is interesting - but what is amazing to me is that these people don't test.

Many years ago I went to Chicago to try and persuade Sears they were wasting God knows how many million on untargeted newspaper inserts - offers I thought would do a lot better if carefully aimed via direct mail.

I had no luck because the man who handled the Sears account at their advertising agency - allegedly a partner of ours - stopped me even meeting the client.

There is an ocean of research showing that indiscriminate promotion doesn't pay as it degrades your brand, but a new report by research firm FastMap reveals a surprising twist.

A survey among over 1,400 shoppers commissioned by the Institute of Promotional Marketing suggests that discounts over 25% do little to get shoppers to try a new product, have no influence on subsequent loyalty, and "could be costing the industry nearly £200m a year".

Discounts work, of course - especially when times get tough. Nearly 90% of people said they had tried a different brand because of a money-off coupon and coupon redemption has shot up 70% in the last two years, with £813m redeemed in 2009.

The surprise is that a coupon with a lower discount value created greater loyalty than the reverse. Three in ten who had used a coupon worth 15p to 20p stayed with the new product afterwards but only 25% who redeemed a coupon for £1 or more kept buying it.Over half those surveyed said they would try a different brand when given a money-off coupon worth 5p to 50p if both the rival product and their usual brand cost £2. Just 27% said the discount would have to be at least £1. This is far less than the current average discount of 48%.

One major dairy brand managed to achieve a 26.8% cost saving by reducing its coupon face value by 25%, according to Valassis MD Charles D'Oyly. This was achieved at the cost of only a 0.66% reduction in redemptions compared with past campaigns.

Research is interesting - but what is amazing to me is that these people don't test.

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Drayton Bird Marketing Articles

The man Bird and his sad story

The CIM named Drayton one of 50 people who shaped today’s marketing.
And David Ogilvy said he “knows more about direct marketing than anyone in the world.” But don't blame him for all the crap you get sent.
He published his first novel, “Some rats run faster” when 27. Hardly anyone read this brilliant work as it had virtually no plot. 4 more books followed: “Commonsense Direct and Digital Marketing” – out in 17 languages; “Salesletters that sell” & “Marketing Insights and Outrages” and "Direct Marketing for Lawyers".
He's written over 1,000 columns, spoken in 50 countries and worked with many leading brands, incl. Amex, BA, Hargreaves Lansdown, Mercedes, Microsoft, Nestle, P & G, IBM, Unilever and Visa.
In 1977, he and two partners set up Trenear-Harvey, Bird & Watson, sold in l985 to O&M. As Vice-Chairman and Creative Director, he helped O&M Direct become the world's largest DM agency network, and was elected to the worldwide Ogilvy Group board.
He now runs Drayton Bird Associates and has interests in 3 other firms. The ones he never visits do much better.
This blog shows what all that has done to his head.